Large AI data centres in Australia will be legally required to generate at least as much power as they consume, under world-first mandatory standards Prime Minister Anthony Albanese announced at the University of Sydney on 15 July.
The AI data centre standards will also require operators to pay their full share of grid connection costs, minimise water use and fund any extra water infrastructure their facilities need. A new Office of AI, established the same day inside the Department of the Prime Minister and Cabinet, will draft the rules. “We will create a legal obligation for the next generation of large-scale data centres to underwrite new power supply,” Albanese said in the speech, titled AI in Australia’s Interests. Large facilities must “put at least as much energy into our grid as they take out of it,” he said.
The framework goes to National Cabinet this month, and the government plans to introduce legislation in early 2027, according to briefings by law firms Gilbert + Tobin and White & Case. Albanese told the audience Australia would be the “first country in the world to bring these issues into a single, national framework.”
What the AI data centre standards require
The mandatory rules replace a voluntary approach. In March the government published its National Data Centre Expectations, five principles asking developers of hyperscale sites and large AI compute centres to secure new clean energy, use water sustainably and invest in local jobs and skills. Both documents build on the National AI Plan the government released in December 2025.
Assistant Minister for Science, Technology and the Digital Economy Andrew Charlton said the framework depends on “a clear and enforceable social licence for AI,” and in a joint March statement with ministers Tim Ayres and Chris Bowen he said the government “will do what is necessary to ensure the growth of AI is sustainable and underpinned by a strong social license.” The Office of AI will coordinate the design of Australian Standards for AI with Ayres and Charlton, and becomes the main contact point between the industry and government. The government has not yet defined which facilities count as large scale, leaving capacity thresholds to consultation and exposure drafts.
The 15 July package also covered copyright, where reform remains unresolved and the government is considering three models for licensing creative work used to train AI, including statutory licences and licensing through a collecting agency. “Not everything produced in Australia is up for grabs,” Albanese said. He added that the government wants “more Australian companies and global firms developing AI here,” per Information Age.
Industry reaction turned on the missing specifics. “The detail will matter as to whether new laws result in Australia attracting investment or deterring it,” said Belinda Dennett of industry group Data Centres Australia. Dr Sue Keay of the UNSW AI Institute welcomed the announcement but called it “very light on detail” about domestic AI investment.
Others argue the package regulates the wrong target. Writing in Pearls and Irritations on 24 July, commentator Sue Barrett said a framework “that regulates infrastructure and content while leaving citizens without a right to know about, or challenge, automated decisions made about them is not a completed project. It is half of one.” Her article said the government had walked away from the 2024 proposed guardrails on human oversight of automated decisions, quoted Greenpeace Australia describing the wait for 2027 legislation as “a betrayal that leaves data centres with a free pass in the meantime,” and noted the Coalition has dismissed the Office of AI as unnecessary bureaucracy.
The Prime Minister argued the rules would help rather than harm investment, telling the Sydney audience that “getting this right will enhance our appeal to international investors.” National Cabinet is due to consider the framework in August, and exposure drafts and further consultation will then settle definitions, including what counts as a net generator and which sites are captured, before legislation reaches parliament in early 2027.
